5 Promising Companies Making Green While Being Green

Like most investors, you probably aim for the best possible return when picking potential investments. But as consumers increasingly clamor for companies to embrace social responsibility, good corporate citizenship is becoming a vital part of many companies' success -- and it can boost the performance of our portfolios, too.

Corporate ResponsibilityMagazine recently released its "100 Best Corporate Citizens" list for 2012, in which it rated members of the Russell 1000 large-cap index on 325 different elements related to responsible behavior. In the coming weeks, I'll delve into each of the seven categories that contribute to a company's overall score.

Today we'll look at companies that score well on environmental factors. Environmental practices get a 19.5% weighting in the list's methodology, tying with employee relations for the most important factor. Here are the top-rated companies in this category:

To earn their high scores, the companies above engaged in a variety of good deeds, including disclosing their total electrical power usage and the percentage derived from renewable and non-renewable sources, implementing a water recycling program, disclosing their total hazardous waste generation, and operating from LEED-certified buildings.

Big savings, big goalsIBM's policies to protect the environment are more than 40 years old. Its energy-conservation efforts between 1990 and 2008 are a great example of how doing the right thing can actually be good for a company, as IBM reaped $343 million in energy-expense savings during the period. The company is spreading environmental responsibility around the globe, too. In 2010 it announced that it would require its 28,000 suppliers (which are spread out across more than 90 countries) to keep track of their energy use, greenhouse gas emission, waste, and recycling -- and require their own subcontractors to do the same. IBM also expects these companies to set environmental goals and publicly report on their progress.

Johnson Controls is making itself accountable, publicly stating some bold goals that it aims to reach by 2018. For example, it aims to reduce its energy intensity by 30%, waste intensity by 20%, water intensity by 10%, and greenhouse gas emissions by 30%, among other things. (The company already succeeded in reducing its greenhouse gas emissions by 30% between 2002 and 2012; this new goal aims to keep improving.) Johnson Controls also produces an annual report on its social and environmental performance.

Measured and reported progressIntel also issues regular corporate responsibility reports, with its 2010 report noting that, "For the past three years, Intel has been the largest voluntary purchaser of green power in the U.S., according to the U.S. Environmental Protection Agency." It went on to say: "In 2010, we recycled 83% of the solid waste generated in our operations, and recycled an estimated 2 billion gallons of water. Our comprehensive water conservation programs have saved nearly 40 billion gallons of water since 1998." The company even links part of every employee's pay to environmental metrics, thereby ensuring that everyone has a stake in its progress.

Hewlett-Packard publicly lists past and future goals, reporting on its progress for each of them. For example, it achieved its 2010 goal of removing all mercury from its entire notebook line by the end of 2010 and almost achieved its goal of diverting at least 87% of its global nonhazardous solid waste from landfills through the end of 2010. (It diverted 84.3%.) One of its 2012 goals is to "double voluntary purchases of renewable energy to 8% of electricity use (in addition to the renewable energy available by default in the power grid)."

Electronic storage giant EMC also reports on goals and progress, noting that between 2005 and 2010 it reduced its greenhouse gas emissions by 29% per dollar of revenue. It's aiming for power supply efficiency of 90% or more for all its enterprise and midrange storage hardware. In 2010 it upped its use of recycled water from its treatment plant by 36% over prior-year levels and composted 75 tons of waste at its Massachusetts facilities.

Earning green while being greenCompanies that treat employees well can boost your portfolio. A Goldman Sachs report found that leaders in social, environmental, and governance policies outperformed their peers by some 25%. That's a great motivation for even the most coolly rational investors to take social responsibility to heart. And here's one more great employer to check out: The Motley Fool.

If you're in the market for solid, socially responsible candidates for your portfolio, check out the Rising Stars portfolio run by my colleague Alyce Lomax. Out of more than a dozen portfolios run by smart Fools, she was recently in second place. And to be introduced to a promising clean-energy stock, check out our special free report, "5 Stocks Investors Need to Watch This Earnings Season."